Beware shift in balance of power

Labor laws are intended to balance power between employers and employees — actually unions who represent employees. Changes to labor laws that tilt the balance too far in either direction impose serious costs on workers and our economy.

Big Labor and members of the Democratic Party are demanding passage of the “Employee Free Choice Act.” This legislation would not only restrict worker choice but throw labor markets out of balance, a condition with negative consequences for all Americans.

The United States currently enjoys a fairly balanced set of labor laws that provide unions an opportunity to convince workers of the benefits of collective representation while retaining worker choice and freedom with respect to that decision. One way the United States ensures balance is to maintain a relatively low threshold to trigger a union vote for certification. Unions wishing to represent workers only have to obtain signatures of support from 30 percent of workers in order to have the National Labor Relations Board institute a secret-ballot vote to certify the union.

Other countries tend to maintain much higher thresholds. For instance, jurisdictions in Canada average 40 percent, with one province requiring a majority of workers (50 percent plus 1).

Once the NLRB has issued a vote, workers are able to obtain information regarding the costs and benefits of unionization and are then free to cast a secret-ballot (anonymous) vote as to whether or not they wish to be represented by a union. There are a slew of penalties that the NLRB can impose for improper behavior, which is again designed to ensure a fair process. This system is inherently balanced but the unions clearly want to change the laws to benefit themselves.

The grossly misnamed “Employee Free Choice Act” would allow unions to be certified without a secret-ballot vote if enough workers (50 percent plus 1) sign union cards in the first step (referred to as card check). This would significantly tilt the balance of power in favor of unions and come at the expense of workers, employers, and the larger economy.

Balance and flexibility promote dynamic and prosperous labor markets. A growing body of scholarly research confirms that flexible labor markets demonstrably outperform regulated ones in terms of job creation, investment, and general prosperity.

For example, Harvard Professor Rafael Di Tella, along with his Princeton counterpart Robert MacCulloch, looked at 21 industrialized countries from 1984 to 1990 to ascertain the influence of labor market flexibility. They found that flexible labor markets enjoyed lower rates of unemployment, and in particular lower rates of longer-term unemployment. There are literally hundreds of supporting studies verifying the benefits of balanced, flexible labor markets.

More specific to the issue at hand, professors Timothy Besley and Robin Burgess examined the influence of changes in power in labor laws in the manufacturing sector. They concluded that changes moving the balance of power towards collective representation (unions) resulted in lower output, less employment and investment, and lower productivity. Eliminating the ability of workers to vote privately and anonymously represents a significant shift in the balance of power towards unions.

The cost of such changes will be dire for American workers, who will bear the burden of higher unemployment rates, less investment, and a generally less prosperous economy. These costs will be widely dispersed while the benefits will be largely concentrated to union leadership and those union members whose jobs are protected. This is not likely to strike most Americans as a reasonable balance. That is something for President-elect Obama to consider as unions attempt to cash in their IOU.

The unions, as well as so-called progressives in the Democratic caucus, are pressing hard for the Obama Administration to champion this shift in the balance of power. This could be one of the first tests of President-elect Obama’s ability to lead on behalf of all Americans rather than the special interests that hold sway in the Democratic Party.

JASON CLEMENS is the director of research at the Pacific Research Institute in San Francisco, CA (

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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